BorgWarner is expanding its electrification portfolio after signing an agreement to acquire Akasol, a maker of battery systems for commercial and off-road vehicles based in Darmstadt, Germany, at a value of 727 million euros ($880 million).
Under the terms of the agreement, a BorgWarner unit will initiate a voluntary public takeover of all outstanding shares of Akasol, at a price of 120 euros per share, a 23 percent premium to the three-month average price.
The transaction is expected to close toward the end of the second quarter, BorgWarner said in a statement on Monday.
BorgWarner shares rose 5.1 percent to $44.12 in midday trading on Tuesday. Markets were closed during the holiday on Monday.
Akasol, initially set up in 1990, makes battery systems for buses, commercial and industrial vehicles as well as locomotives and ships. It buys lithium cells and adapts them to systems that are used by manufacturers such as Daimler and Volvo.
BorgWarner said the acquisition would “significantly expand its commercial vehicle electrification capabilities.”
“Akasol’s manufacturing footprint and established, in-production customer base are complementary to BorgWarner’s and would accelerate our foothold into the fast-growing commercial vehicle and off-highway battery pack market,” BorgWarner CEO Frederic Lissalde said in the statement.
Suppliers that traditionally made components for internal combustion powertrains such as BorgWarner are facing financial pressure from the shift to electrified vehicles.
BorgWarner has sought to shore up its position in electrification through several recent acquistions, notably a $3.2 billion deal last year to acquire Delphi Technologies. In 2019, BorgWarner bought a 20 percent stake in battery packs supplier Romeo Power Technology, which was started by former engineers from Tesla, SpaceX and Samsung.
Commercial vehicles are becoming a critical business for BorgWarner, especially with the acquisition of Delphi Technologies, Lissalde told analysts and investors last week on the supplier’s fourth-quarter earnings call.
“This market segment is really important for us,” Lissalde said, according to a transcript of the call. “The electrification of those vehicles will also, we think, be profound, and we are ready.”
Also last week, BorgWarner introduced a new high-voltage electric motor for commercial vehicle use that can deliver 400 kilowatts of power. The motor, which has 800-volt capabilites, will go into production in 2024.
Akasol has about 300 employees at three sites in Germany and one in the U.S., in Detroit. It also also building a production facility in Hazel Park, Michigan.
BorgWarner said Akasol would continue to be led by its management team of CEO Sven Schulz, who is also its founder and largest shareholder; CFO Carsten Bovenschen; and CTO Stephen Raiser.
Akasol’s loss increased to 7.8 million euros ($9.5 million) in the first three quarters of 2020 from 3.2 million in the same period in 2019. Its revenue rose 30 percent to 40.6 million euros.
Prior to the Delphi deal, BorgWarner ranked No. 25 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $10.2 billion in 2019.